A couple years ago, online savings accounts such as ING Direct became very popular. Their enticing savings rates caused many people to take their short-term savings out of traditional banks and into the internet world of banking. When my wife and I got married, we opened up an ING savings account for our emergency fund and any other short-term savings for large purchases in the future. We still have it, and it’s been a great account for us. Now, banks offering online savings account are trying out the online checking account. ING rolled out their Electric Orange checking account, but it has not received the same attention as its Orange savings account. I’ll break down the advantages and disadvantages of both accounts so you can figure out if either account is right for you.

The ING Orange Savings Account

The ING Orange Savings account would replace the dreadful savings accounts that brick-and-mortar banks offer. I always laugh when I see the 0.2% and 0.5% savings rates at Bank of America and Wachovia.

You won’t get rich from this account. You’ll use it to park cash for short-term savings such as an emergency fund or saving up for a car.

Advantages:

The interest rate used to be 4.75% a couple years ago, but it’s still 3.00% today. This is infinitely better than the rates that traditional banks offer, unless you’re putting away a million dollars. But, you’d be an idiot to sock away a million bucks in a short-term savings account.

You can access your money anywhere that you can find an internet connection. Let’s say you’re in France, and you need to make a money transfer, you can do it at an internet cafe.

The transfer time is two business days. ING is quick to transfer money into your checking account.

It’s harder to acess your money. This is an advantage and a disadvantage to an online savings account. The advantage is that it will help prevent you from making an impulse buy. If it takes you two days to access your money, it gives you more time to figure out if you should really buy the plasma TV you were looking at the other day.

No fees and no minimums.

An automatic savings plan to help you save on a consistent basis.

It’s FDIC insured up to $100,000.

Disadvantages:

It takes two days to access the money. This could pose a problem if you keep your emergency fund money in this account, and your breaks down. You won’t have immediate access to the money. The only advantage to the Paypal money market account is that you can get a debit card to access the money. If ING offered a debit card for their Orange Savings account, it’d be the best savings account on the planet!

You can find a better interest rate.

Keeping your money in a virtual account scares some people, because identity theft is the fast growing crime in the United States. However, ING has a very sophisticated login process. It takes much more than cracking a user name and a password to hack an ING account.

The Electric Orange Checking Account

It’s still hard for some people to dive into the world of online checking accounts. But, if you’re the ultimate techy and you like paying for everything online, the Electric Orange Checking is the account for you.

I don’t have this account, because of the reasons that I will discuss in the disadvantages section. I can’t speak from personal experience about this account, but a good friend of mine opened the account about six months ago, so I received some good information from him. Here is the table from the website showing the interest rates for the account

$0 – $49,999: 1.75%

$49,999 – $99,999: 3.20%

$100,000 or more: 3.35%

Advantages:

You earn interest on your money. There are not very many checking accounts that offer a MINIMUM of 1.75% interest.

No fees associated with the account.

A debit Master Card that can be used for free at over 32,000 ATMs.

No overdraft fees. You get a line of credit hooked up to your account, and once your account dips below $0, you’ll pay a variable daily interest rate on the money that you owe. This is a huge advantage, because my wife and i have paid a few overdraft fees simply from bad accounting, rather than the lack of funds.

Online bill pay. You can send electronic or paper checks to any individual or company.

It’s FDIC insured up to $100,000.

Disadvantages:

Depositing money is a pain. If you want to deposit cash into the account, you’ll still need a checking account from a traditional bank. You can set up direct deposit for your paycheck, and send in paper checks to ING, but otherwise, they haven’t figured out the cash thing.

If you don’t live in a metropolitan area, it could be hard to find an ATM that doesn’t charge you a fee.

Many young people seldom write paper checks, but it’s convenient when you don’t have cash and you can’t use your debit card. You would have to find an internet connection to send someone a check.

I think ING needs to figure out a way for people to deposit cash or checks into the approved ATMs. If they do this, I will definitely sign up for an account. If I’m going to make the switch, I don’t want to keep my Bank of America checking account. Hopefully, this review helps you make your decision. Money Smart Life is a big proponent of keeping an emergency fund, and the Orange Savings Account is a great option to store the money. The Electric Orange Checking account definitely has its advantages for those that never open up their checkbook and want to make the financial life paperless.

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Erik Folgate is a husband and father living in Orlando who's been writing about money online for 6 years. Digging himself out of $20k of debt after college and his former experience in the insurance industry give him some useful insights into personal finance issues.

Comments

ING debit cards may have been hacked. Debit charges just appeared in my ING account even though I have physical possession of the cards and they have not been activated. (They’re still attached to the mailing card from ING.)

The account has never been used in commerce only to on-line transfer funds in and out of my small local bank.

We love our ING savings and checking accounts. We do direct deposit with them, and do almost all of our banking online with them.

I will say that it has been handy to have an account with the bank on the corner, though, for check/cash deposits, and paper checks for those very odd times you need them right away. I probably go through one booklet of checks a year. Our corner bank is on our “transfer bank” list at ING, and it’s been quite painless.

This was a very insightful and well stated post. Personally, I prefer HSBC Direct, and prior to that Emigrant Direct due to the quicker reactions to fed moves, but I started out with ING Direct and had no complaints (other than the lagginf interest rate and reaction time to fed increases). Many people are still skeptical about such “online” institutions because they simply do not understand that many are divisions of long-time “traditional” institutions with histories extending back 100+ years. For anyone interested I address this issue in a post last month:

Being an advisor I preach the benefits, but am always met with questions regarding security. I have been able to get through to some, even my parents, who are of the generation that still prefers passbook savings accounts and don’t believe the money is truly in the account unless they can have the entry printed in the passbook and hold it in their hands, so I am still hopeful!

Although I understand your disadvantages you’ve listed for the ING Electric Orange account, there’s simply no reason NOT to have it.

And it solves one of your disadvantages of not having “instant” access. The transfers between the savings and checking account is “usually” instant (except a few times late at night), so you can then access them through the debit card.

As for HSBC. Currently, the rate is higher than ING because they are doing a promotion, but as for “much higher”, I don’t think so. Before this promotion, they were 3.00 just like ING.

It’s one thing for me to say that the product is good, but it adds much more credence to my claims when you all back up it up with your experiences. I think that most people are very pleased with ING, their overall customer support, and the fact that they don’t hide anything from you. It’s one of the best banking insitutions that I have worked with in a long time.

I absolutely love ING and their checking account. I have kept my Wachovia checking as backup, but haven’t used it in the last year.

I love the multiple savings accounts that I can have, I currently have 12. Instant transfer between ING checking and ING savings.
I love their free paper check service, haven’t bought stamps in months.
I love the interest on my checking balance.
Plenty of ATMs around.
You can send checks to yourself as I investigated if you need.
Mailing in checks to deposit is easier and cheaper than going to an ATM.

Right now, I wouldn’t even consider switching to anything else, as I haven’t seen anything that comes close to suiting me even better.